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The UK faces major energy
challenges up to 2030 and the
greatest change is likely to be
in the way it generates its own
power, says Mark Griffiths

10
Setting global standards

James Kavanagh offers an
update on the International Land
Measurement Standards, and
explains how the concept of “fit
for purpose” can be applied

12
Faster cadastre

18
Timing is everything

Carrying out ecological surveys
at the right time of year can
be crucial to avoid costly and
frustrating development delays,
says John Newton

20
Uncertain ground

Trevor Ivory and George Avery
mull over the issues in defining a
“valued landscape” and assess
what it means for planning

22
The white ribbon zone

Toby Driver and Dan Hunt
explore how LiDAR maps are
helping to understand climate
change impacts on the islands,
reefs and headlands of Ireland
and Wales

A critical shortage of
surveyors is slowing down the
documentation of land around
the world. Frank Pichel reveals
how new technologies offer
quicker and easier methods than
traditional surveys

24
Tax planning

14
The way forward

26
RICS celebrates 150 years

RICS Director of Professional
Standards Ken Creighton talks
about progress made in the past
year to establish standards for
the profession, and the work that
lies ahead

Sophie Dixon summarises
the key tax points that both
landowners and their advisors
should consider when selling
UK land

To commemorate its anniversary,
RICS is running some exciting
campaigns for professionals

15
Investing in forestry

Planting new woodland is a
way for landowners in Scotland
to secure income and grants,
explain Virginia Harden Scott
and David Robertson

16
Land of the mega deal

Kamal Hideib discusses the
challenges of the mega-deal
market and valuation challenges
in the Middle East

While every reasonable effort has been made to ensure the
accuracy of all content in the journal, RICS will have no
responsibility for any errors or omissions in the content. The
views expressed in the journal are not necessarily those of
RICS. RICS cannot accept any liability for any loss or damage
suffered by any person as a result of the content and the
opinions expressed in the journal, or by any person acting or
refraining to act as a result of the material included in the
journal. All rights in the journal, including full copyright or
publishing right, content and design, are owned by RICS,
except where otherwise described. Any dispute arising out of
the journal is subject to the law and jurisdiction of England and
Wales. Crown copyright material is reproduced under the
Open Government Licence v1.0 for public sector information:
www.nationalarchives.gov.uk/doc/open-government-licence

F E B R U A R Y/ M A R C H 2 0 1 8 3

R IC S L A N D
JOU RN A L

CH A I R M E N

FROM THE

CHAIRMEN
RUR A L

Gerard

Smith
FRICS

The rural board met in Dublin late last
year and conversation was dominated
by Brexit. There are huge concerns both
north and south of the border about what
this will bring. The Irish remain perplexed
at the referendum result, so discussions
centred on the reasons behind the UK’s
leave vote and explanations from those
who support an EU exit. Representatives
from all four UK nations and the Republic
of Ireland think a deal that avoids tariffs
on goods between the countries would
be the best outcome.
We were also privileged to have a
superb presentation from Teagasc –
the Agriculture and Food Development
Authority in the Republic – who provided
a clear overview of the sector’s
dependency on the EU’s Common
Agricultural Policy and the varied fortunes
for those in different sectors, with dairy
doing better than the rest.
Meanwhile, the rural group is updating a
range of existing guidance and preparing
some new titles. Two recently published
pieces of guidance I recommend are the
professional statements on compulsory
purchase and rural arbitration. If you
would like a copy of either, please email
Fiona Mannix (fmannix@rics.org).

ENV I RON ME N T &
RES OUR C E S

Stephen

McKenna
MRICS

The board’s working group has been
revising guidance on liabilities and risk
management, carrying out a further
APC review and considering new topics
for insight papers. We are still tracking
the potential effects of Brexit and other
4 F E B R U A R Y/ M A R C H 2 0 1 8

current issues. Getting good-quality
best practice case studies is ever-more
critical for our members. To this end,
we will advise on arrangements for our
conference in due course.
Meanwhile, the Chancellor has
proposed 1m homes as part of his recent
budget, but we know that the large-scale
infrastructure that will be required to
support these will have significant impacts
on many areas, and we are concerned
that growth should be sustainable.

LAND & RESOURCES
GLOBAL BOARD

Barney

Pilgrim
FRICS

The land group’s primary initiative,
International Land Measurement
Standards (ILMS), has reached the global
consultation stage, and there is a great
ILMS article by James Kavanagh in this
issue (p.10) that will bring members up
to speed on developments. ILMS have
already featured at several international
and national conferences. We were
especially pleased to present at the
16,500-strong Union of Chambers of
Turkish Engineers and Architects in
Adana in a special session along with
Dr Orhan Ercan and Dr Chryssy Potsiou,
respectively, the vice-president and
president of FIG.
Turkey is a growing power in the global
land and surveying profession with good
universities, a buoyant economy and an
ongoing World Bank land and valuation
project. Infrastructure development and
land acquisition were top of the agenda
at the meeting, and ILMS seem to have
come along at the right time for several
other nations undergoing development
programmes. The standards are already
being referenced by UN agencies such as
the UN Committee of Experts on Global
Geospatial Information Management
and UN Habitat. The ILMS launch is
planned for FIG in Istanbul in May
(http://bit.ly/2zMWVhI).

GEOMAT I CS

Gordon

Johnston
FRICS

The lines between land and hydrographic
surveying are becoming increasingly blurred
as technology, especially remote sensing,
provides cover and data across the two
domains. These advances have seen
impressive developments in data collection,
processing and visualisation. For the coastal
zone, innovation and digitalisation mean
significant progress in data collection speed,
data rendering and sharing for a variety of
stakeholders. The widespread adoption of
automated systems on land, sea and roads, is
rapidly changing our perception of technology
and how it may affect us, especially with
consumers who want to access information in
close to real time through generic applications.
Our profession must adapt and improve work
practices more quickly. While early adopters
bear the risk, often they gain the most.
Information is the key. Collecting,
developing and processing data to add
value, answer questions and offer insight
for decision-makers is the objective. Spatial
data plays an increasingly important role in
providing that baseline context, exposing
important relationships that can exist
between features. The appetite for data will
continue to grow rapidly.
We can make the greatest impact through
collaboration. Groups such as the Open
Geospatial Consortium, FIG, the International
Association of Oil & Gas Producers’
Geomatics Committee, the Survey Association
and the Chartered Institution of Civil
Engineering Surveyors have all collaborated
with RICS on documents and guidance notes.
Partnerships are powerful, so RICS has to
consider which steps will ensure it remains
relevant to members and young professionals
more broadly. RICS must provide support so
that critical parts of our land, seas and built
environment remain appropriately surveyed
and monitored by qualified individuals. For a
conservative profession, this is likely to be an
interesting challenge.

RI CS LAND
JO UR NAL

UPDATE
PLA N N I N G &
DEV E LOPME N T

Paul

Collins
MRICS

“These are challenging times, when social
and economic forces are giving a new
significance to the surveyor’s concern for
the proper use and development of land,
and political attitudes to property, profits
and the professions are exerting pressures
for reform.”
Is this something written to mark our
150th anniversary year? No: these words
came from then RICS Secretary Robert
Steel in 1969, at a milestone conference
in York. Has anything really changed
since? Fundamentally, very little. In his
conclusion, Steel asserted that “surveying
is a discipline in its own right, of the utmost
importance to human progress. If this is
what we believe, let us do all in our power
to ensure that its functions are properly
understood and that circumstances enable
it to operate for the public good”.
Our Royal Charter refers to our
collective responsibility to work for
the “public advantage”. Professional
standards are crucial to this, and planning
and development surveyors, along with
others in the land group, have a particular
responsibility for the good stewardship of
land whether developed or conserved.
At the same conference, Jeffrey
Switzer of the University of Cambridge’s
Department of Land Economy argued
that our profession had the skills to help
society “define the alternatives and select
its objectives”, posing the question whether
it was better to spend £800m developing
Concorde or invest in “industrialised
housing or electric vehicles for use in
cities”. Where might we be in 2018 if the
latter choice had been made?
Switzer also underlined his passion for
excellence in the profession. Education,
first-rate APC preparation and meaningful
lifelong CPD remain vital to meeting his
aspiration, especially in these “challenging
times” of our 150th anniversary.

Event presents range of natural
capital assessment tools
The UK government and its academic
advisors are talking up the economic value
of natural capital and ecosystem services.
Rural property professionals need to
communicate the pros and cons of these,
and take opportunities to gain recognition
– and recompense – for the natural assets
they steward.
Some of the key conclusions of a
seminar held at the Stock Farm, on the
Tatton Estate, Cheshire, in October
were that developers of natural capital
evaluation tools need to understand the
complexities of rural estate management,
where taxation is a prime consideration.
Land managers must ensure their voices
are heard when new policies for
agriculture and the rural environment
are being formulated.
At the event, Charles Cowap from
Harper Adams University reviewed
trends that have shaped rural estate
management since 1947 and asked
whether natural capital and ecosystem
services are concepts that offer a chance
to reconsider the practice.
Alison Smith of the University of
Oxford’s Environmental Change Institute
then picked out three natural capital
assessment tools that are focused at
the estate level, are simple to use and
appropriate to the UK.
She also highlighted free data sources
including government website data.gov.uk
and Multi-Agency Geographic Information
for the Countryside (magic.defra.gov.uk)
on areas such as flood zones, target areas
for water quality improvement or noise
levels near busy roads.
Angus Middleton of Landmark
Information Group meanwhile showcased
the Viridian tool. This combines hydraulic
modelling and geographical information
systems (GIS) to model interaction
between water flows and the landscape,
can assess natural flood management,
and identifies areas that are sensitive to
the siting of milking parlours, silage and
slurry stores or are suitable for growing
crops prone to erosion, such as maize.

This system has been used to address
flash flooding at Fillongley, Warwickshire,
with light imaging, detection and ranging
data to calculate floodwater volumes.
The EU-funded NaturEtrade is a free
online platform that can look at services
including water flows, carbon storage in
above-ground vegetation, soil erosion
protection, pollination and recreation,
Dr Beccy Wilebore of the Oxford
Long-Term Ecology Laboratory explained.
NaturEtrade also includes a trading
platform that allows buyers and sellers of
ecosystem services to make deals and
monitor performance by remote sensing.
Finally, the Spatial Evidence for Natural
Capital Evaluation tool was presented
by Dr Katie Medcalf of Environment
Systems. This has a strong agricultural
pedigree, and uses data sets to evaluate
services in different habitats using GIS.

Young surveyor winner
Colliers International’s Director of
Planning, Jonathan Manns MRICS
MRTPI, won the “Young Surveyor of
the Year” title at the 2017 RICS Matrics
awards for surveyors aged 35 and under.
The judges praised his extensive work to
improve London’s built environment and
address the city’s housing crisis.

Finding the energy
The UK faces major energy challenges up to 2030 and the greatest change
is likely to be in the way it generates its own power, says Mark Griffiths

T

he UK’s Clean
Growth Strategy,
published in
October, is driven
by three primary
considerations in
relation to energy:
carbon reduction,
cost minimisation and security of
supply. Energy use falls into three basic
categories: power, heat and transport.
So how will these needs be met over the
next decade or so?
Burning coal is no longer a viable
option in the context of national and
international carbon reduction objectives,
and is disappearing fast in the UK.
Hinkley Point also demonstrates that
new large-scale nuclear power plants are
not compatible with cost minimisation.
It is likely that by 2030, transport will
still be dominated by the oil-driven
internal combustion engine, though with
increasingly impressive efforts to change
6 F E B R U A R Y/ M A R C H 2 0 1 8

this in the longer term. Heat generation is
expected to still be dominated by gas.
In short, the greatest change in the UK
energy mix to 2030 will be in the way it
generates power.

Energy sources
Coal
There is broad recognition that coal,
the most carbon-intensive fossil fuel,
needs to be phased out as quickly as
possible. Globally, coal production fell
by 6.2% in 2016, the largest decline on
record. In the UK, consumption dropped
by a massive 52.5%, as coal’s share of
electricity generation more than halved,
falling to just 9%. The last deep coal
mines in the UK closed in 2015, with
imports accounting for 46% of remaining
coal consumption in 2016,
mostly from Columbia
and Russia.
On one day last
April, for the first

A 2017 survey by the Energy Institute
found that four-fifths of its members
believe the UK will miss the 2030 goal,
and that the use of gas for heating will
decline only moderately by then. Energy
conservation measures can help at the
margins, but in the near term there is no
easy way to replace gas as the primary
source of the nation’s heat.
Along with oil, UK gas production is
in long-term decline, down in 2016 to
less than 40% of its peak in 2000, when
the country was self-sufficient. That left
enough production to meet only 53% of
demand, with net imports rising 22% on
2015. Around 65% of the imported gas
came from Norway and 12% from the
Netherlands and Belgium, all by pipeline.
The 23% balance was liquefied natural
gas (LNG), nearly all shipped from Qatar.
Russia’s state-controlled Gazprom
meets around a third of Europe’s gas
needs. The UK Department for Business,
Energy and Industrial Strategy (DBEIS)
calculates that only a small amount of
Russian gas normally reaches Britain,
coming via the Netherlands from the
larger international pipeline network to
which it is connected. However, as the
need for imports grows, the UK’s location
on the extremities of that network is a
potential concern. Norway is close by,
but a 2016 forecast by Eclipse Energy,
an analytics unit of Platts, projected
Norwegian gas output falling more than
half by 2027.
A further challenge is that the UK
has very limited gas storage facilities.
An enormous 70% of previous storage
capacity is being lost as a result of the
decommissioning of the Rough facility in
the North Sea, which is no longer safe
to operate.
This risk to security of supply will
increase as domestic gas production
continues to decline and reliance on
imports grows. A worst-case scenario
by National Grid shows 93% of UK
gas demand being met by imports in
2050. There is an aspiration that the
development of inland gas fracking
could help to mitigate this reliance.
However, there are far greater geological,
environmental and political constraints
in the UK compared with the USA where
fracking has become commonplace.
Oil
The turn of the century saw
the onset of the decline
of UK oil production,
and by 2016 34% of oil
consumption was imported.

“
Four-fifths of the

Energy Institute’s
members believe
the UK will miss
its 2030 target for
cutting emissions
It also saw the rise of the term “peak oil”
as the oil price climbed during the first
decade. “Peak oil” does not mean that the
world is running out of oil; it refers, rather,
to the increasing difficulty in producing
it at a price that does not cause general
economic decline.
The extreme oil price spike of July
2008 was eventually followed by an
unprecedented three-year run to
September 2014, when the price of
Brent crude averaged more than $100
per barrel. There were a number of
responses, the most visible being the
adoption of shale fracking production
techniques in the USA. However, even
though accounting for around just 6% of
global supply, US fracking has become
a victim of its own success by helping to
drive down oil prices.
The result has been a dramatic
reduction in exploration and development
investment across the oil sector globally.
There are important consequences:
as investment in new fields has stalled,
production from existing fields continues
to decline.
A shift towards electric vehicles is
expected to reduce demand for oil. But
the key question is: by how much, and
when? Although demand has been falling
in OECD countries due to improved
fuel efficiency and continued economic
weakness, oil consumption grew globally
in 2016 by 1.6%. That is not a marginal
figure in terms of bringing forward
new supplies, if repeated annually. The
International Energy Agency (IEA) reports
that conventional crude oil discoveries fell
to a record low in 2016, with exploration
spending expected to have fallen for a
third consecutive year in 2017.
The reasons are relatively
straightforward. First, the easiest
prospects in the world have long since
been tapped. Second, the oil price
has simply been too low relative to
exploration costs as new prospects
become harder to bring online. To put this
in perspective, oil discoveries totalled just

2.4bn barrels in 2016, compared with a
9bn average over the previous 15 years.
Yet global annual consumption totals
more than 30bn.
The typical time lapse between oil
discovery and production is five to
seven years. Energy consultancy Wood
Mackenzie believes the fall in discoveries
is likely to produce an oil supply shortage
and price spike from 2019 onwards. The
IEA has estimated that the equivalent of
Iraq’s entire annual production needs to
be added to global supplies every two
years simply to replace the decline in
previous output.
Barclays has forecast that 2019 will see
the lowest year – since it began keeping
records in the 1990s – for new capacity
additions, with just 1.2m barrels per day of
new supply coming forward. By contrast,
a continuing supply decline from existing
fields combined with growing demand
would amount to a differential of 4m
barrels per day, producing an almost 3m
gap over new supply. The IEA has also
warned of rapid oil price increases by the
early 2020s as existing wells continue to
be depleted.
Should these scenarios play out, the
potential implications are significant.
Even with production in the USA greatly
improved through the use of fracking,
Middle Eastern producers already hold
their largest share of world oil markets
since the mid-1970s: with 34% of global
output, or around 32m barrels per day,
this is the highest proportion since 1975.
In 2016, the IEA warned of this growing
global dependence on production from
the region, one of the most unstable in
the world.
Nuclear
Fission-based nuclear
power has been a
reliable baseload
generator for
electricity production,
accounting for 21%
of generation in 2016. However, it is
becoming increasingly uncompetitive
once all costs, particularly environmental
and safety ones, are reflected in the price
of the electricity produced. Projections
for adding new nuclear capacity by 2030
therefore look optimistic.
The commissioning of the UK’s newest
nuclear plant at Hinkley Point in Somerset
has resulted in developers being offered
a guaranteed electricity price more than
double recent average wholesale rates.
In essence, power from large-scale
n
nuclear fission plants cannot compete
F E B R U A R Y/ M A R C H 2 0 1 8 7

RICS L A N D
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E N E R GY

n with gas without major subsidy, leading
the Financial Times to conclude that: “A
financially viable nuclear power station
looks increasingly like a mirage.” Indeed,
Switzerland and Germany have already
made the decision to phase out nuclear
power. Meanwhile, alternative nuclear
fusion technology is estimated to be at
least 50 years away from viability.
Renewables
By the end of 2016, there
was enough installed
capacity to supply an
estimated 24.5%
of world electricity
from renewables, according
to REN21, a global umbrella
group for renewables. This
was dominated by hydropower – 16.6% of
global electricity – followed by wind at 4%,
bio-power at 2% and solar photovoltaics
(PV) at 1.5%.
For all global energy consumption
in 2015, including heat and transport
but excluding traditional biomass used
primarily for cooking and heating in
developing countries, renewables
contributed only 10.2% compared
with 78.4% coming from fossil fuels.
Nevertheless, total global renewable
power capacity grew by almost 9% in
2016. Solar PV accounted for around
47% of that growth, followed by wind at
34% and hydropower at 15.5%.
Under EU commitments the UK’s official
target is to meet 15% of total energy
demand using renewable energy sources

by 2020, a figure which translates into a
30% figure for electricity, 12% for heat
and 10% for transport.
In 2016, 8.9% of total UK energy
consumption came from renewables,
representing 24.6% of power generation,
6.2% of heat and 4.5% of transport. This
was little changed from 2015, despite
an increase in capacity, due to less
favourable weather for solar and wind.
Nonetheless, on one Sunday last June,
70% of UK electricity demand was met by
low-carbon sources, mostly nuclear, solar
and wind; this was not a working day and
weather conditions were favourable. On
Friday 26 May, however, for part of the
day, solar produced more power than
nuclear for the first time.
Progress is expected to accelerate as
the price at which renewables become
viable keeps falling. Last April, Denmark’s
Dong Energy announced it would build
two wind farms in the German North
Sea without subsidies, relying solely on
wholesale market electricity prices.
Globally, solar prices fell by 62%
between 2009 and 2017, with even the
UK opening its first subsidy-free solar
farm in September 2017. Bloomberg New
Energy Finance (BNEF) estimates that
for most of the world, solar PV will be the
cheapest form of new electricity capacity
in the 2030s. In some locations it is
already cheaper than coal.
BNEF also estimates the world is
within a decade of peak fossil fuels in
the power sector, and that by 2040 the
price of electricity from solar PV will have

dropped by a further 66% and offshore
wind by 71%.
However, the need for back-up
conventional supplies – particularly fast
start-up gas plants – will continue to add
to overall consumer costs. In the UK,
wind conditions can vary considerably,
not only through the year, but from year
to year. The Solar Trade Association
estimates 12.1GW of solar capacity is now
installed in the UK, equivalent to eight
new-generation nuclear reactors, should
the weather ever allow it all to be used at
once. That, of course, won’t be often.
This problem of intermittency will
reduce once storage for electricity can be
widely deployed. Though timing is difficult
to predict, BNEF estimates that by 2028
affordable batteries will be ubiquitous.
The Cinderella of renewables remains
wave- or tide-generated marine power.
While the UK has an extensive coastline,
development is technologically difficult.
However, tidal has one major advantage:
it is available every day without fail.
Despite previous policy promotion,
enthusiasm for using farmland crops
as a bioenergy source for heat, power
or transport has been in decline. This is
because, first, some analysis indicates
that it may not be as carbon-positive as
originally thought and, second, growing
vegetation for energy can displace other
valuable land uses, particularly food
production and biodiversity. Energy from
other biosources – such as landfill gas,
waste food, waste wood or farm and
industrial waste – will continue to have a

Figure 1
Total UK Energy Consumption: since 1990, gas has become the country’s most
important fuel, mainly displacing coal. Source: DBEIS

1990
0.7
17.7

2016
Bioenergy and waste

14.2

Primary electricity
(mainly nuclear)

21.5
12.4

66.9

Property professionals’ role

Coal

76.7
51.2

Gas

77.2

Oil

68.0

213.6

192.8
Million tonnes of oil equivalent

role, but it is likely to be small relative to
overall energy demand.
In 2016, the total share of UK energy
consumption accounted for by
low-carbon sources – nuclear and
renewables – rose by just 0.6% to 17%,
with nuclear representing 8%, bioenergy
6%, wind 1.7%, solar 0.5% and hydro
0.2%. So, much work remains to be done.

Transport
There is now a general assumption that
global transport systems will transition to
the use of electric power, particularly for
light vehicles. BNEF’s current projection
shows relatively low uptake before 2030,
but reaching 33% of the global car
fleet by 2040. This displaces up to 8m
barrels per day of transportation fuel with
additional electricity consumption.
Governments and manufacturers
continue to make announcements
about the phasing-out of the internal
combustion engine. Pricing, however, will
be crucial. The most expensive part of
an electric car is its battery, sometimes
accounting for half the total cost. Lithium
ion battery prices have halved since 2014,
and some expect a further 30% fall by
2021, and more than 70% by 2030.

Security of supply
Although total energy consumption has
fallen around 10% since 1990

that it would be almost impossible for
UK electricity demand to be met by
2025 as a result of the slow build rate
for new power stations. It identified
a worrying potential supply gap of
40–55% of demand.
Even if overestimated, those figures
suggest that old and perhaps unsafe
plants may have to be kept going for
longer than planned – not a minor matter
in the case of nuclear installations.

(see Figure 1), partly through efficiency
improvements, the UK is increasingly a
large net energy importer. This follows
the closure of most coalmines and
the decline of offshore oil and gas
production. There are significant national
security implications, with indigenous
energy production now 58% lower than
its peak in 1999.
In addition to oil, gas, coal and
uranium, UK energy imports include
electricity brought in via interconnector
subsea cables, primarily from France and
the Netherlands, with net transmissions
representing 4.9% of electricity supply
in 2016. Including and beyond power
generation, total net energy import
dependency has returned to levels not
seen since the 1970s, accounting for
36.2% of energy consumption in 2016.
The power infrastructure situation is
also challenging. In 2016 the National
Audit Office reported that 60% of 2015
generating capacity was projected to
retire by 2035, including ageing coal and
nuclear power stations. With a potential
need for almost 140GW by 2035, to
include some electrification of heat
and transport, this would require the
construction of 95GW of new capacity
– which would be equivalent to 90% of
established capacity.
However, a report from the Institution
of Mechanical Engineers had concluded

Many property professionals are already
involved in implementing renewable
energy infrastructure in the UK. However,
with only limited prospects for replacing
gas as the principal means of heating
in the near term, surveyors will need to
continue to provide energy conservation
measures, particularly for the existing
building stock where most heat energy
can be expected to be consumed for
many years to come.
Nonetheless, the solarisation of
existing buildings, linked to on-site
battery storage, is an area with great
potential. Lightsource is already offering
Sunplug, a combined solar PV and
battery system, at no upfront cost to
consumers, and aims to reach a million
UK homes by 2020. Similarly, Nissan
plans to store solar-generated electricity
in the batteries of electric cars when
they are not in use, and then to export it
to the grid at times of high demand, with
participants rewarded accordingly.
Solar PV paints and plastic film
less than 0.1mm thick are also in
development for use on roofs and
walls, and PV glass for use in windows.
With this come opportunities for the
localisation of energy systems, either
on an individual building basis, or via
community-based micro-grids.
Though only a small proportion of
the total stock, new buildings can
take things to an altogether higher
level. Already one four-bedroom
dwelling constructed in West Kirby on
Merseyside has energy running costs of
just £15 a year, including heat. b
Mark Griffiths is an associate partner at
Carter Jonas and a member of the
RICS Countryside Policy Panel
mark.griffiths@carterjonas.co.uk

Related competencies include
Sustainability

F E B R U A R Y/ M A R C H 2 0 1 8 9

RICS L A N D
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L A N D R E P O RTI N G A ND
M E AS U R E M E N T

James Kavanagh offers an update on the International Land Measurement
Standards, and explains how the concept of “fit for purpose” can be applied

E

Setting global standards

Effective administration
is essential for the good
governance of land, and
a strong and simple land
information system (LIS)
that contains all the details
needed to verify land parcels
and validate ownership is a
prerequisite for a functioning
land market. A working LIS
should help record and report
this information, especially when
ownership is being transferred.
Most issues relating to land or
property ownership occur in the
peri-urban area, where informal
settlements clash with rapid
urbanisation, and where land
and tenure disputes can quickly
escalate into open conflict.
This is also the area of greatest
economic development,
increasing land value, rampant
development speculation and
the most significant loss of
revenue for local authorities.
Land and tenure security
formalisation occurs first to
enable transfer, acquisition,
development, disposal,
inheritance, compensation and
taxation. Revenue from land
taxation can be used to improve
services and much more – in
developed nations, it can add up
to 4% of GDP, but in developing
countries it is almost negligible

A fair framework
The International Land
Measurement Standards
(ILMS) are intended for use by
individuals and companies and
1 0 F E B R U A R Y/ M A R C H 2 0 1 8

act as a framework to support
the determination of fair
compensation for land assets
(see Figure 1).
ILMS are:
bb a framework for
reporting on land assets and
transactions of such by people
and legal entities
bb a basis for collecting asset
and transactional information to
identify what is on the ground,
what information is available
and its quality
bb a set of principles for
transparency, integrity
and consistency in land
asset reporting, supporting
mechanisms such as the
International Financial
Reporting System
bb non-prescriptive and
flexible, so they can be
adopted incrementally in line
with fit-for-purpose (FFP)
principles, thereby advancing
best practice for reporting on
land assets
bb a due diligence process,
which informs the overall
investment analysis; this will
draw on many sources of
information and corroborate
them so any risks can be
assessed or costed.
ILMS are not:
bb the template for a
new cadastral or land
administration system
bb a replacement for
any existing guidelines or
standards, such as the
UN Food and Agriculture
Organization (FAO)’s Voluntary
Guidelines on Responsible
Governance of Tenure, the
Land Administration Domain
Model or Social Tenure
Domain Model
bb to instruct governments
in the development of new or
revised legislation
bb designed to track
national progress towards

the UN Sustainable
Development Goals
bb concerned with the
collection of data to create
or update national or
international databases.

Why ILMS are needed
About 70% of land around
the world is unregistered,
and transactions can take
place under fragile legal
and administrative regimes
with incomplete property
information and little or no
systematic approach to
recording it. This results in a
high-risk property environment
caused by an inability to
verify documents’ content
and increased potential for
dispute without resolution.
For example, 3.1m people
and more than $178bn of
infrastructure investment in
India are locked into legal
land disputes. Consistent land
reporting globally will benefit
emerging markets significantly.
Large-scale land acquisition
issues are also top of the
agenda for UN Habitat, the
FAO and the World Bank,
especially since the adoption
of the New Urban Agenda at
Habitat III in Quito, Ecuador, in
2016. According to the World
Bank, 10m–15m people are
displaced by development and
infrastructure projects each
year. Between 1950 and 2015,
around 80m were displaced
for the same reason in China,
and more than 65m in India.
The lack of a transparent,
robust land transfer process
severely undermines the
ability of national governments
and international agencies to
provide fair compensation.
Displacement is only likely
to increase as low- and
middle-income countries
experience growth in
infrastructure development,

Fair exchange
The New Urban Agenda has
highlighted fair land transfer
and compensation for legal
acquisition as an important
way of ensuring a sustainable,
equitable urban future for much
of the world’s population. If
there is no clear and equitable
means for transferring land and
the process does not protect
the rights of both the seller
and the investor, then costs
will increase, conflict and legal
challenges will escalate, and
projects will either overrun
or not happen. Surveyors are
essential to this process as
they deal with both buyers
and investors, organising case
files and technical reports,
protecting rights, controlling
costs and adding value.
The Thomson Reuters
Foundation initiative Place
offers a resource for those
dealing with land issues,
and has helped bring back
into focus the thoughts of
Hernando De Soto, author of
The Mystery of Capital, who
recently stated: “There is no
such thing as an investment
without property rights that are
negotiable and transferable”
(http://tmsnrt.rs/2kntx5g).
These last two terms,
“negotiable and transferable”,
are at the core of international
land standards.
De Soto suggests that
providing the world’s poor with
titles for their land, homes
and unregistered businesses
would unlock $9.3tr in assets,
because this would allow them
to use their homes or land

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to borrow money and start
businesses. The Land Portal
(http://bit.ly/2BK0aUk) is
also highlighting the growing
importance of global land
investments and the necessity
for consistency in land transfer
protocols and standards.

Fit for purpose
ILMS will forge direct links
between land professionals,
legal advisors and financial
reporting by removing risks
from transactions and
implementing an agreed
information framework.
There is a direct
connection between the
efficiency of each transaction
and the land data. Land
valuation is essential
for transfer, but can be
strengthened by the data
made available during
the process.
The key concepts of the
FFP approach – purpose,
flexibility and scalability – are
engrained in ILMS, and FFP
can be incrementally improved
over time. The core seven land
data elements in the ILMS are:
land tenure; parcel boundary
identification; site or land area;
land use; services; building; land
value, or transfer price.
Aerial and satellite imagery
could help establish a mapping
and parcel identification base
for tenure security and land
formalisation initiatives. But a
desperate lack of professional
surveying capacity in low- and
middle-income countries
means that FFP must be
deployed to support land
markets, not only in terms
of surveying but also
appraisal valuation.
FFP can be applied across
the entire land transaction
process, from tenure security
to taxation, and also in the
seven ILMS land information
framework elements listed
above. FFP can work with
services as well. A scaled
version could include
information on water supply,
electricity, roads and
telecommunications. The ILMS
include examples of the type of
data needed.

The ILMS have been
constructed to enable the flow
and collection of information
from the start of the land
transaction to the recording of
its completion, either formally
or informally.
ILMS also contain an
agreed geospatial survey
accuracy table, which for
the first time outlines what is
meant by survey output and
its relationship to scale and
achievable accuracy. This
is an enormous milestone
for the global geospatial
surveying professional.
The ILMS coalition and
the standards-setting
committee (SSC) have taken
steps towards a common
understanding of land transfer,
land valuation and geospatial
accuracy, but there is more
to be done. Organisations
such as FIG, the Council of
European Geodetic Surveyors,
RICS, Ordre Des Géomètres
Experts, the Ghana Institute
of Surveyors, the National
Society of Professional
Surveyors, the New Zealand
Institute of Surveyors and
many others have shown
what we can do as a
unified profession.
FFP administration will help
the growing need for technical
surveyors and valuers and
training. Such professionals
must establish the appropriate
formal land transfer and
taxation systems for low- and
middle-income countries.
The ILMS coalition has
engaged with other important
land initiatives, such as the
Open Geospatial Consortium
working group on land
administration, the UN
Habitat Global Land
Tool Network initiative on
the valuation of informal
land and settlements, the
USAID–Thomson Reuters
Land Matters consultation
initiative, and the UK
Department for International
Development’s project Land:
Enhancing governance for
economic development.
Lack of transparency can
increase difficulty in releasing
the value of the land as

Publicly held and publicly available
information – in an LIS framework

Publicly held information – without
an LIS framework

Conveyancer/notary

ILMS Land information
Reporting Standard

C. Reality on ground
Land
parcel

Land
parcel

Land
parcel

Land
parcel

an asset and contributes
to a lack of awareness
of land policies and legal
frameworks; this undermines
land tenure security and
helps stoke conflict and
social unrest. The opaque
nature of land administration
systems and decision-making
mechanisms exacerbates
corruption by officials and
citizens alike.
However, good land
data remains inaccessible.
New technologies such as
blockchain can help, but
land is an emotive and highly
political issue that needs
strong governance and an
enforceable legal framework
to inspire public and investor
confidence. ILMS are just one
part of a global picture – but
they are key to helping the

transparent, fair and secure
transfer of land.
ILMS are open for global
consultation until 28 February,
and are expected to launch at
FIG Istanbul in May. b

A critical shortage of surveyors is slowing down the documentation of land
around the world – a vital step in reducing poverty. Frank Pichel reveals how new
technologies are replacing traditional surveys with quicker and easier methods

Faster cadastre

I

ncreased demand for
land and a greater
understanding of the
importance of land
rights in sustainable
development and poverty
alleviation have sparked
exponential growth in
efforts to document and formalise such
rights around the world.
Professionals working in the land sector,
particularly surveyors, have a critical role
to play in meeting the growing demand
for land documentation, but a shortage of
land surveyors has become a bottleneck.
In Uganda, for example, an estimated
15m parcels of land are not registered or
documented. It would take the country’s
few dozen registered land surveyors more
than 1,000 years to document and register
all these if they continue at the current
rate. Even when a surveyor is available,
their fees are often prohibitive for the
vast majority of citizens in emerging
economies. Surveys are mostly done on an
ad hoc basis for the select few who can
afford them. Unfortunately, this bottleneck
in the form of affordable services is
common in emerging economies.
From Uganda to the Ivory Coast,
traditional approaches to documenting
and recording property rights are not
keeping pace with increased demand.
However, recent technological innovations,
including drones, GPS technology and
cloud computing, are making it easier
than ever for individuals, communities
and organisations to map and document
land rights, so a new role for surveyors is
beginning to emerge.

k Partners collecting data in India
Simple technologies
Cadasta Foundation, a non-profit
organisation based in Washington DC,
was launched in 2015 to meet the growing
demand to document land and resource
rights for those left out of formal land
administration systems in emerging
economies. Cadasta works to tackle
land administration constraints with easy
digital tools and technology designed to
help its partners efficiently document,
analyse, store and share critical land and
resource rights information, particularly in

places where governments are failing to
provide the public good of equitable and
affordable land administration.
The Cadasta platform is a secure suite
of mobile and web-based tools designed
to collect multi-layered information
about people’s relationship with land and
resources, including spatial dimensions,
footage from drones, digital maps, video
or audio interviews, photographs, paper
attestations, tax receipts and other
supporting documentation. It can also
store data that has already been collected
Piloting fit-for-purpose approaches
to documenting property boundaries
in Kosovo

through traditional paper-based surveys
and maps, and data collected with
Cadasta’s suite of digital collection forms;
or it can be paired with a wide variety of
other digital data collection tools.
Cadasta’s digital forms enable partners
to collect data quickly based on their
specific needs. The flexibility of the
platform allows for data collection in a
variety of ways, whether using
GPS-enabled smartphones and tablets,
paper-based forms combined with satellite
imagery to identify property boundaries
or hand-held GPS devices. Cadasta works
to overcome surveyor shortages and the
problems faced with traditional systems,
informing individuals, organisations,
communities and governments as they
make decisions to secure their land and
resource rights to build stronger, more
sustainable communities.

An incremental approach
In much of the world, particularly in Africa,
land is managed by customary tenure
systems that are not part of any formal
statutory system. In many countries, the
government is not able to recognise or
manage what is happening in these areas.
Additionally, the shortage of qualified land
administrators and surveyors in emerging
economies affects the government’s ability
to manage a formal land system.
For example, there are fewer than
45 licensed surveyors in all of Tanzania,
which has a population of about 45m
people. The idea of Cadasta’s platform
is thus to move communities along a
continuum, incrementally documenting
their land rights. For this purpose, a
sketch map with satellite imagery of
imprecise boundaries may be a sufficient
starting point. Local partners can then
improve on that data, if they choose, until
they eventually meet their government’s
requirements. By strengthening the
evidence of customary land rights, the
security of these rights is improved.

A new role for surveyors
By making it easier for individuals,
communities and organisations to map
and document property, Cadasta gives
governments and surveyors access to
more land data than ever before.
With its digital data collection and
management tools, the platform can help
formal land administration systems move
away from paper-based processes. This
enables a new and evolving role for land
surveyors in emerging economies in data
quality control and management. In this
role, the traditional surveying community

Documenting land rights in Bangladesh
In an effort to reduce conflict and provide a foundation for more sustainable
development, the government of Bangladesh launched an ambitious programme
to document all land rights in the country and create a national digital land
registry. The government enlisted a local non-profit organisation, Uttaran, to
ensure that vulnerable groups such as religious minorities, lower castes, women
and the elderly were informed of the project and that their land rights were
included in the registry.
After first attempting the project on printed survey forms and testing a range
of digital tools, Uttaran turned to Cadasta for help. Cadasta worked with Uttaran
to make the process more accurate and efficient, with a bespoke data collection
form using a smartphone- or tablet-based data collection application called
GeoOpenDataKit or GeoODK. GeoODK is an open-source mobile application
for collecting survey information. After a short training course with Cadasta,
Uttaran staff reached more than 13,000 families by migrating their existing data
and continuing with the field data collection. The data collected included key
documents that supported ownership claims.
Using the survey data, the government and Uttaran educated landowners and
communities about their legal rights. This accelerated the issuing of land titles for
these families, and enabled the government to launch the country’s first digital
land rights database.

“
It would take land

surveyors in Uganda
more than 1,000
years to document
unregistered parcels

can use their skills and experiences to
verify and improve initial data to bring it
into the formal system for more effective
and affordable management.
This approach was successful in
Rwanda, where the UK government
supported massive, systematic titling.
Through this programme, the Rwandan
government was able to demarcate and
register all land in the country for the
first time – more than 10m parcels – in
just three years. Rather than rely on the
country’s few registered surveyors, the
programme trained local communities
and landowners to demarcate their
parcel boundaries. The data was then
submitted to the local land agency District
Land Bureau for review by professional
surveyors before going into the registry.

countries. Without accurate information
regarding land rights, many development
goals – including food security,
sustainable resource management,
climate change mitigation and equal
rights to property for women – remain
impossible to achieve, while there is also
potential for conflict when rights are not
recognised and enforced.
Cadasta Foundation is working
to overcome these hurdles. Where
individuals, communities, and
organisations can document their land
rights, then governments and surveyors
have access to more land data than ever
before. By reviewing and formalising this
data, surveyors can help the 70% of the
world’s population who are currently left
out of formal systems to benefit from
secure land and resource rights. b

Conclusion
A functioning land administration
sector is the foundation of a national
economy, critical for economic growth.
Unfortunately, effective land registries and
cadastral systems with national coverage
exist in only a fraction of the world’s

Related competencies include
Cadastre and land management,
Legal/regulatory compliance, Mapping,
Surveying land and sea, Sustainability

F E B R U A R Y/ M A R C H 2 0 1 8 1 3

RICS L A N D
JO U RN A L

STA N DA R D S

RICS Director of Professional Standards Ken Creighton talks to Land Journal
editor Mike Swain about what has been achieved in the past year to establish
standards for the profession, and the work that lies ahead

The way forward
Q

What is your overall assessment
of the past financial year in terms
of standards?

A

Standards cover both professional
behaviour as well as the technical
aspects of chartered surveying. We
are working on standards across this
spectrum; in the past year we have
accomplished a lot.
For example, we produced major
professional statements on conflicts
of interest, which came into effect this
January. We also carried out in-depth
research on professionalism to get the
market insight that would guide our
standard-setting. Thus we have projects
focused on key issues such as money
laundering, ethics and data security.
On the technical side, we made
advances in property measurement
standards, including residential and
industrial; we also published the updated
valuation Red Book. The International
Construction Measurement Standards
(ICMS) were launched in Vancouver,
Canada, in July. This is a major suite of
international standards supporting the
benchmarking, measuring and reporting
of comparable construction costs across
the world. Moreover, land measurement
standards and business valuations are
other big technical areas where we have
made great advances in the past year.
For instance, in business valuation we
have launched the credential Certified
in Entity and Intangible Valuations
(CEIV). This is for professionals who
perform fair-value measurements for
businesses and intangible assets.
The project originally came about
after the US Securities and Exchange
Commission expressed concerns about
professionalism in valuation. Working with
other key stakeholders and professional
bodies such as the American Institute
of Certified Public Accountants and the
American Society of Appraisers, we
jointly launched CEIV.
1 4 â&#x20AC;&#x192; F E B R U A R Y/ M A R C H 2 0 1 8

Q
A

What has been the biggest
challenge you have faced?

Our biggest challenge relates
to how we actually deliver these
standards as a profession. Creating
standards is just the first step. The
challenge is to have those standards
adopted and used in the marketplace
so that they benefit the market in the
public interest. Each standard starts
as simply words on a page; they need
the professionals to do the work for the
benefit to be realised.
We need the conferences where they
will be discussed and explained, the
training and all the related support to
ensure professionals and the market
realise the benefits of adopting and
using these standards. The challenge
is not just to create the standards, but
have them make a positive impact. This
is the role of RICS, and where we need
to succeed.

Q

Where are the opportunities for
adoption of standards and growth
of the profession?

A

There are a few specific areas
with great opportunities. I
mentioned ICMS: we have already had
amazing take-up, with major firms and
governments around the world using
them to compare costs on their projects.
For example, the province of Ontario in
Canada, the Irish government and the
UK government have all been looking
at ICMS to examine and compare their
spend on infrastructure projects. This is
a real opportunity for RICS, as we add
value by speaking to the world about
how ICMS can benefit such a substantial
part of the market.
Another example is the International
Property Measurement Standards
(IPMS). Along with the IPMS for Office
Buildings, we are soon publishing an
updated professional statement to cover

â&#x20AC;&#x153;
The challenge is

to have standards
adopted and used
so they benefit
the market in the
public interest

residential and industrial buildings. Now
entities with warehouses, residential
and office space can compare space
consistently across their portfolio.
We can develop the skills in the
profession and the numbers employed
by getting companies, governments and
individuals to adopt our standards and
hire the professionals to use them. That
in turn makes people want to become
professionals, maintain their professional
status and take advantage of the training
and products we offer. Itâ&#x20AC;&#x2122;s an opportunity
to connect those standards through
adoption to growth of the profession.
There is a lot of good work ahead. b
Ken Creighton is RICS Director of
Professional Standards
kcreighton@rics.org

Virginia Harden Scott and David Robertson look at the potential for
landowners in Scotland to gain income and grants from planting new woodland

nvesting in new woodland offers
landowners valuable opportunities to
maximise productivity of their land, and
diversify incomes at a time when these
are falling in traditional agriculture and
there is also uncertainty over subsidies.
The Scottish government has a
target to plant 100,000ha of new
woodland between 2012 and 2022, and
landowners are being encouraged, with
grant support, to consider the benefits
of integrating forestry into their land use.
Farmers in the Central Scotland Green Network (CSGN) area
(see map, right) can receive funding from the Scottish Rural
Development Programme’s Forestry Grant Scheme (FGS) of up
to £8,710/ha towards new woodland planting, including a special
CSGN uplift of up to £2,500/ha. Additional monies for fencing
and tree protection are available, while farmers also remain
eligible for the Basic Payment Scheme.
In the two years to October 2017, 617 woodland creation cases
worth more than £64m and covering 13,889ha were approved
across Scotland, of which 205 cases worth more than £16m,
covering 2,495ha of woodland creation, were in the CSGN area.

diversifying their businesses as well as producing a source of
low-cost wood fuel to reduce heating costs.
The favourable tax regime for commercial forestry should
also be considered by landowners. Income realised through
the sale of timber and payments received under the FGS are
exempt from income tax and, following two years’ ownership,
commercially managed woodlands will normally attract 100%
inheritance tax business property relief. Neither is there
any capital gains tax liability on the increase in the value of
commercial tree crops, only the value of the underlying land.
In addition, there are wide-ranging benefits from woodland
creation that are not related to timber itself. While these are not
financially quantifiable, they support optimum business efficiency
by providing shelter for livestock to improve live weight gain,
helping with disease control and reducing postnatal deaths in
lambs. They also contribute to flood risk and climate change
mitigation, and support overall biodiversity. b
Virginia Harden Scott is Woodland Creation Development Officer,
Central Scotland Green Network Trust
virginia.harden@csgnt.org.uk
David Robertson is Head of Investment, Scottish Woodlands
david.robertson@scottishwoodlands.co.uk

The CSGN Woodland Creation work programme is part funded by Central
Conservancy, Forestry Commission Scotland.
Note that while this article offers some general observations on the
investment opportunities associated with woodland creation, professional
advice should always be sought with respect to each landowner’s
individual circumstances.

Related competencies include
Forestry and woodland management, Land use and diversification

F E B R U A R Y/ M A R C H 2 0 1 8 1 5

RICS L A N D
JO U RN A L

VAL UAT I O N

Land of the mega deal

Kamal Hideib discusses the challenges of manoeuvring
mega deals and valuation in the Middle East

R

eal-estate deals in
Qatar tend to be
larger than in many
other countries
as the sector
consists of larger
developers, with
immense liquidity
in the market. Enormous development
projects worth hundreds of millions of
dollars span multiple asset classes and
cover vast areas. But the unique nature
of the market can make transactions
problematic from a valuation perspective.
I have experienced how these mega
deals unfold, working on $1.4bn worth
of real-estate transactions in the region,
the largest single one being $393m for a
40-floor tower on the Pearl Qatar Island.

State of the market
The Qatar real-estate market presents
some stark contrasts in performance.
Due to a depressed oil price in recent
years, the residential and especially the
office market have been underperforming,
experiencing decreased rental rates and
higher vacancies. Conversely, the price of
land in the country has risen substantially
1 6 â&#x20AC;&#x192; F E B R U A R Y/ M A R C H 2 0 1 8

in recent years along with the appetite for
income-producing buildings of more than
$100m in value.
Land trades at prices well above its
intrinsic value, in part due to the lack of
supply in certain areas of Qatarâ&#x20AC;&#x2122;s capital,
Doha, but also a result of real estate
being the asset class of choice in the
region for ultra-high net worth (UHNW)
investors. As a consequence, land
values have reached levels that make
developments unfeasible.
Many of the buyers in these mega
deals are therefore UHNW family offices.
The amount of liquidity they hold and their
relationships with banks allow them to
close deals quickly, and with a shorter due
diligence period than would be customary
in mature markets. Mega deals are not
usually brokered, but are frequently closed

Land values have
reached levels that
make developments
unfeasible

as off-market transactions between the
seller and distinguished target buyers.
When deals are openly marketed, there
are usually several bidders competing for
the same asset, which tends to push up
the bid price and has compressed cap
rates â&#x20AC;&#x201C; that is, yields. Buyers have been
closing deals at cap rates as low as 4.5%
to 5.5% on income-producing assets in
the prime residential market.
The buyers in these mega deals tend to
have a long-term view of the market. They
like to acquire prize assets, in the belief
that these will always hold value through
future market cycles.

Closing mega deals
The pool of buyers for mega deals is
attracted to prime assets domestically,
and is also especially interested in
acquiring in major foreign markets such
as London, New York and Paris.
A recent mega deal was for a $393m
40-floor office tower on Pearl Qatar
Island; the tower was a greenfield
development project that we initiated,
and for which we obtained funds through
a Sharia-compliant financing facility at a
local Islamic bank. We then constructed

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It is crucial to be
confident that a
property’s useable
area is accurately
measured
based on comparable transactions, and
residual values, found when conducting
a feasibility study. Ideally, the price of
land in the market should be in line with
the latter, and therefore feasible for a
purchaser to develop that parcel and
benefit from adequate investment returns.
These residual values are considerably
lower than the amount buyers are willing
to pay, and consequently buyers are
potentially overpaying massively.
The business of real-estate valuation
services in Qatar is fragmented.
International firms such as DTZ and
Colliers follow best practice, but at the
other extreme, some local consultancies
regrettably do not use International
Valuation Standards and are easily
manipulated by the client to influence the
outcome of the estimated value. This is
one reason why some market participants
do not fully appreciate the valuation
process. These issues collectively make a
chartered valuer’s job in the region much
more complex.
the tower, and on completion sold off the
asset to a buyer here in Qatar.

Measurement standards
There are currently no officially adopted
guidelines in Qatar with regard to
measurement standards for property.
This poses a challenge, as professionals
from many countries working in the
sector are accustomed to differing
standards. As global organisations are
aligning their practices to be congruent
with one another, embracing the
International Property Measurement
Standards (IPMS) would certainly improve
the situation in the region. The Qatari
government authority needs to commit
formally to the use of IPMS throughout
the market, and RICS’ Qatar office is
currently in discussions towards this end.
From a valuation perspective, it is
crucial to be confident that a property’s
useable area is accurately measured
before estimating the value. Because
there is currently no official standard in
the market, a party runs the risk of
over- or underestimating costs, useable
area and values.
A discounted cash flow (DCF) method
of valuation, where it is used, allocates
a sale or lease price to the useable

areas, which is derived from the value
of the property. When conducting a
DCF valuation, if the useable areas
have not been measured according to
the standard then the value will not be
completely accurate as a result.
The failure to use a unified
measurement standard can damage
reputations in real estate – certainly
with respect to selling apartments to
the public, as it seems the manner in
which advertised sizes are measured is
inconsistent and potentially misleading.

Ethics in valuation
Qatar is a developing market, and
although there has been unprecedented
growth, participants may not fully
understand the importance of protecting
the integrity of the valuation process.
Accordingly, undue influence on valuers
from vested interests is prevalent. As the
market is not especially sophisticated,
stakeholders have been known to lack
understanding of the valuation process,
and try to negotiate or put pressure on
the valuer to influence the outcome to
their advantage. Valuers must and are
obliged to uphold their integrity.
The sensitivity of the DCF methodology
to the assumptions made is an ongoing
issue for valuers globally. A DCF valuation
is prone to error and could be easily
manipulated as the value is sensitive
to the discount rate and other factors.
Valuers should be cautious not to use
these variables to sway the value to their
benefit or suit their needs.
Adjustments to the assumptions in a DCF
model may not conflict with International
Valuation Standards; however, if they do
not represent the true market conditions,
then this violates an RICS member’s
integrity. If values are consequently
inflated for these reasons, it may force
an impairment in future years, which will
affect the company’s recorded earnings. b

Related competencies include
Conduct rules, ethics and professional
practice, Valuation

F E B R U A R Y/ M A R C H 2 0 1 8 17

RICS L A N D
JO U RN A L

E CO LO G Y

Carrying out ecological surveys at the right time of year
can be crucial to avoid costly and frustrating development
delays, says John Newton

I

Timing is everything

It could be argued that
environmental legislation in
the UK started when King
John drew up laws to protect
the New Forest as a hunting
ground. More recently, the
Wild Birds Protection Act
1880 came into force in
response to the fashion
industry’s penchant for putting
feathers from birds such as
great crested grebes in hats.
Perhaps the biggest step
forward in protecting the
biodiversity of England and
Wales, though, was the
Wildlife and Countryside
Act 1981, with equivalent
legislation in Scotland and
Northern Ireland. This act
and its various amendments
provide protection for Sites
of Special Scientific Interest
(SSSIs), and also for a number
of species considered to be
under threat of extinction,
including all reptiles, bats and
water voles; and, with some
exceptions, birds, especially
when they are nesting.
Two pieces of European
legislation followed – the
Birds Directive and the
Habitats Directive, the latter
subsequently transposed into
the UK Habitat Regulations.
Broadly speaking, these give
greater protection to habitats
and to larger areas comprising
a variety of important habitats,
1 8 F E B R U A R Y/ M A R C H 2 0 1 8

such as Special Protection
Areas (SPAs) under the Birds
Directive, or Special Areas of
Conservation (SACs) under
the Habitats Regulations.
Normally these are all
already protected as SSSIs,
and the European legislation
adds another layer of defence.
Some of these habitats may
also be designated as Ramsar
sites – that is, wetlands
deemed to be of international
importance, and named after
a convention that was signed
by the UK in Ramsar, Iran, in
1971. Some developers will
already have experienced
constraints on development
resulting from these
designations, with 5km buffer
zones being established
around SPAs and SACs.
Proceeding with development
where it may have a damaging
impact on these sites can be
virtually impossible.
The Habitats Directive also
defines a number of European
Protected Species (EPS).
These include, among other
creatures and plants, all bats,
dormice and great crested
newts, which cannot be put
at risk of injury or death by
human activity, or disturbed
or moved without permission
from the Statutory Nature
Conservation Programme.

Tread softly
Given that these animals
are difficult to find, are
only evident in certain
seasons of the year, require
particular conditions to
survive and are difficult, if not
impossible, to move, then the
potential constraints on any
development, irrespective
of whether it is in protected
habitat or not, are immense.

Famously, thousands of
pounds have been spent on
dealing with great crested
newts – identifying their
existence and numbers,
finding or possibly creating
new habitat to which to
move them, and then actually
transporting them there.
Infrastructure schemes in
particular often come across
such creatures; in some areas
they occur in reasonable
numbers, but are completely
absent from other places.
Add to this list the protection
of badgers and the legal
constraints around invasive
plants such as Japanese
knotweed and the developer’s
lot is not an enviable one.
However, there are many
instances in which EPSs,
species protected under the
1981 act, badgers and invasive
plants being successfully
dealt with, enabling
development to proceed
while conserving species of
concern or eradicating the
troublesome ones.

All in the timing
Why is it that the industry
still struggles with these
issues? The key element is
one of timing – in particular
of surveys but also the timing
of impacts on wildlife and
any mitigation necessary.
Wild animals may only be
active at certain times of
year, so surveys have to be
undertaken accordingly.
For example, reptiles –
slow-worms, snakes and
lizards – are active between
March and September, but
may not be evident during
the other half of the year. So
surveys for reptiles in the
middle of winter will count

allow derogation from the
law and, potentially, suitable
areas identified and prepared
to which to move species.
Finally, the species are
translocated or encouraged
to move on their own. Again,
this is a very time-consuming
and imprecise process that
cannot be made to conform
to project timescales or to the
developer’s expectations.
However, ignore the issues
or advice given and the
consequences can be severe.
Breaching the legislation is
a criminal act and the police
will get involved. A number
of developers have been
successfully prosecuted,
and, although the fines are by
no means extortionate, the
stress, delays and potential
for acquiring a bad reputation
all mount up.

Lessons from nature
The need to conserve wildlife
is not an issue that is going
to go away, and although
successive governments may
mutter about excessive red
tape, the more time goes on
the greater the constraints are
going to be. So, as soon as
you have an idea for a project,

you should commission
someone – ideally a member
of the Chartered Institute of
Ecology and Environmental
Management – to carry out a
study of the chosen site and
its context.
A desk study will highlight
whether there are any
protected habitats or species
nearby, and a preliminary
ecological appraisal will be
the next step to take. This
will identify any valuable
habitats on the site and flag
up the potential for protected
species to be present. Further
surveys for protected species
may be necessary, but if it
is the wrong time of year for
those surveys to take place
then significant delays could
be experienced.
Do not go to an ecologist
at the last minute before
submitting a planning
application – if their report
flags up the need for further
surveys, the application is
bound to fail. The larger
the project the more likely
it is that protected species
will be encountered. The
usual suspects in terms of
protected species are, in no
particular order, nesting birds,

bats, reptiles, great crested
newts, water voles, badgers
and dormice. These are all
found throughout the UK.
The same issues apply to
urban as to rural development.
Indeed, in some urban
areas wildlife can be more
diverse than it is in, say, the
monocultural agricultural
plains of East Anglia. Animals
such as bats prosper in
built-up areas and can
turn up in the most unlikely
places. In 2015, a developer
was fined £4,500 plus
costs and victim surcharge
for knowingly destroying
a pipistrelle bat roost in
Kilburn, London. But industry
schemes such as the Building
Research Establishment
Environment Assessment
Method (BREEAM) and Civil
Engineering Environmental
Quality Assessment and
Award Scheme (CEEQUAL)
also provide opportunities to
make a positive contribution
to wildlife protection.

Positive conservation
Globally speaking, we need to
promote the need for positive
conservation if the loss of
biodiversity is to be halted, let

alone reversed. In the UK,
the development industry
should look to make positive
contributions. Already there
is at least one large housing
developer that is producing
a strategy to enhance
biodiversity through its
projects, for instance.
Perhaps the best example
of how development can
work for conservation are
Thames Water’s reservoirs
in Barnes, south-west
London. In the 1990s, these
were deemed surplus to
requirements. However,
they were also designated
as an SSSI – although their
continued status as such
was in danger of being lost
since the qualifying bird
species, the smew, was
becoming an increasingly
rare winter visitor.
So the Wildfowl and
Wetlands Trust under
Sir Peter Scott formed a
partnership with Thames
Water to create a wetland
centre. Berkeley Homes
joined them and developed
10ha of the site, which
helped fund a 40ha wetland
centre. The centre is again
an SSSI, albeit on the
basis of different qualifying
features to the original,
and is an internationally
recognised example of what
can be achieved in an
urban area.
Turning round projects
so their contribution to
conservation gets full billing
alongside the development
opportunities provides a
win–win situation for
all parties, and for the
biodiversity that helps
sustain our life on earth. b
John Newton is Strategic Advisor to
the Ecology Consultancy
john@ecologyconsultancy.co.uk

Trevor Ivory and George Avery mull over
the problems of defining a “valued landscape”
and assess what it means for planning

Uncertain ground

I

n the six years since the
government published
the National Planning
Policy Framework
(NPPF), the courts have
been asked to look at
various chapters and
paragraphs of it and
give guidance on what they mean. Last
year, the Supreme Court had its first
chance to consider the NPPF, having to
decide what the word “for” meant in the
context of the phrase “relevant policies
for the supply of housing” in Suffolk
Coastal District Council v Hopkins Homes
Limited and the Secretary of State for
Communities and Local Government
[2017] UKSC 37.
As the courts cleared up one ambiguity,
however, the planning litigation circus
moved on to another: the concept of
a valued landscape. The NPPF uses
the phrase just once, in paragraph 109,
and only then as a passing reference.
Nevertheless, what constitutes a valued
landscape and the consequences of
a landscape being so classified are
regularly becoming significant issues in
planning appeals.
Paragraph 109 opens the chapter
entitled “Conserving and Enhancing
the Natural Environment”. It begins:
“The planning system should contribute
to and enhance the natural and local
environment by … protecting and
enhancing valued landscapes, geological
conservation interests and soils.”

Defining a valued landscape
The principal authority on the meaning
of “valued” is Stroud District Council
v Secretary of State for Communities
and Local Government and Gladman
2 0 F E B R U A R Y/ M A R C H 2 0 1 8

Developments Limited [2015], which has
been followed by numerous High Court
and appeal decisions, such as Forest
of Dean District Council v Secretary
of State for Communities and Local
Government and Gladman Developments
Limited [2016] EWHC 2439 (Admin),
Gladman Developments Limited v West
Oxfordshire District Council [2017] PAD
3, and Gladman Developments Limited
v Central Bedfordshire Council [2015]
PAD 53.
In Stroud, Mr Justice Ouseley held
that a landscape did not need to have a
formal designation in order to be valued,
but that the term meant more than simply
being popular locally: “to be valued
would require the site to show some
demonstrable physical attribute rather
than just popularity”.
Stroud offers little guidance on what
sort of physical attributes might lead
to a finding of valued landscape, and
subsequent decisions have therefore
tended to rely heavily on box 5.1 of
the third edition of the Institute of
Environmental Management and
Assessment (IEMA)’s Guidelines
for Landscape and Visual Impact
Assessment to assist in the identification
of “demonstrable physical attributes”; for
instance, the High Court upheld the use

of box 5.1 criteria to determine that a site
was not a valued landscape in Cheshire
East Borough Council v Secretary
of State for Communities and Local
Government [2016] EWHC 694 Admin.
The Stroud test is not without
ambiguity, however, and a point of
frequent debate is whether the physical
attributes required must literally be
found on the proposed development
site, or whether it is enough for them to
be present in the landscape of which
the site is part. Both Stroud and the
appeal decision in Central Bedfordshire
adopt a narrow approach, focusing
on the identification of demonstrable
physical attributes on the appeal site
itself. In Stroud, for example, Mr Justice
Ouseley determined that the inspector
was correct to conclude that the appeal
site’s location in the setting of an Area
of Outstanding Natural Beauty was
not a demonstrable physical attribute
of the site itself. This suggests that
the landscape to be valued should be
confined to the appeal site, with its
surrounding features excluded.
Other cases adopt a broader approach,
though, taking into account not just
physical attributes of the site but also
those of the wider landscape. In the
appeal decision relating to land south
of Nanpantan Road, Loughborough,
Leicestershire (X2410/W/15/3028159 and
X2410/W/15/3028161), planning inspector
John Woolcock held that “perceptions
turn land into the concept of landscape
[and] … people perceive the appeal site
in its wider context. The question then
becomes whether the site is part of
a valued landscape, and this involves
assessing both the site itself, and its role
or value within the wider area.”

RI CS LAND
JO UR NAL

Woolcock concluded that the appeal
site was a valued landscape because
it comprised part of open countryside
that provided the setting for Charnwood
Forest Regional Park and National Forest,
despite the fact that it was simply an
“open agricultural field”.
A wider approach was also adopted
in the appeal decision relating to
land off Nethercote Road, Tackley,
Oxfordshire (D3125/W/15/3138076),
where inspector Karen Ridge held that
“an arable field” was nonetheless a valued
landscape because: “It is the quality of
the landscape of which the appeal site
forms part and the contribution which the
appeal site makes as an integral part of
that landscape.”
Until the matter returns to the courts,
there will continue to be ambiguity,
although the more recent trend is
towards the wider approach. Given the
importance that judges and inspectors
have so far tended to attribute to the third
edition of the IEMA guidelines, it is also
worth noting that its authors arguably
intended a wider approach, advising
that the assessed landscape should
encompass the appeal site and, “the full
extent of the wider landscape around it
which the proposed development may
influence in a significant manner”.

Policy presumption
The NPPF is based on a policy
presumption in favour of sustainable
development, which is determined by
applying the test set out in paragraph 14.
This makes it clear that the presumption
does not apply to development proposals
if specific NPPF policies “indicate that
development should be restricted”, with
a non-exhaustive list of such restrictive

policies in footnote 9. While the footnote
includes some landscape designations
such as Areas of Outstanding Natural
Beauty, it does not include valued
landscapes. As the list is expressly
not exhaustive, however, it is perhaps
surprising that some have sought to
argue that paragraph 109 sets out one
such restrictive policy.
The case of Bovis Homes Limited and
Miller Homes Limited v Secretary of State
for Communities and Local Government
and Cheltenham Borough Council [2016]
CO 3029 concerned an application for
permission to appeal to the High Court
against the decision to refuse a planning
appeal where the planning inspector and
Communities Secretary had concluded
that the paragraph 109 sets out a
restrictive policy for the purposes of
paragraph 14.
One of the 11 grounds for review was
that the inspector and Communities
Secretary had misinterpreted paragraph
109 in so concluding. In his order refusing
permission to appeal, Mr Justice Lewis
said: “paragraph 109 indicating, among
other things, that valued landscapes
should be protected and enhanced[, it] is
a policy within the meaning of paragraph
14”. While the judge took a firm position
on the point, the decision is not good
precedent, as it does not meet the
requirements of paragraph 6 of Practice
Direction (Citation of Authorities) (Sup
Ct) [2001] 1 WLR, and there are a number
of decisions in which the contrary view
has been taken.
Both the Nethercote Road decision
and the appeal decision relating to
land opposite Springfields, Napton
Road, Stockton (J3720/A/14/2219604)
concluded that NPPF paragraph 109 was
not a restrictive policy for the purposes
of paragraph 14. The rationale for this
conclusion was succinctly expressed
by the inspector in the Napton Road
decision: “‘Valued’ does not equate to
‘designated’. It would be illogical if it did.
The framework footnote 9 examples
of designations, which the framework
intends should restrict development,
include a number where preserving the
quality of the landscape is a central
purpose of designation. If those were the
only valued landscapes for the purposes
of the framework it would say so.”
In Preston New Road Action Group
v Secretary of State for Communities
and Local Government [2017] EWHC
808 (Admin), Mr Justice Dove opined
on the meaning of paragraph 109. While
he was not specifically considering
whether it is a restrictive policy for the
purposes of paragraph 14, his words are

The term meant
more than simply
being popular locally
hard to reconcile with a conclusion that
paragraph 109 constitutes such a policy.
“I am quite satisfied that this policy of
the framework is very plainly setting out
a high-level strategic objective for the
whole of the planning system,” he said.
“The phrase ‘protecting and enhancing
valued landscapes’ is to be read and
understood as a high-order strategic
objective of the planning system as a
whole. How that objective is then achieved
is to be articulated in the planning policies
which address the appraisal of landscape
impact in the context of particular kinds
of development.”

Expanding the list?
The uncertainty over what constitutes
a restrictive policy for the purposes of
NPPF paragraph 14 is acknowledged
in the housing white paper Fixing our
broken housing market published by the
government earlier in 2017. The paper
proposes expanding footnote 9 into an
exhaustive list, which would add certainty
and clarity while avoiding the need for
such interpretation by the courts.
In the meantime uncertainty remains,
and it is only a matter of time before
the question comes before the courts
again. In the end, it is likely to require the
intervention of the appeal courts before
the matter can be fully settled.
In our opinion, paragraph 109 is not
a restrictive policy for the purposes
of paragraph 14. As Mr Justice Dove
recognised, it is a high-level policy
that has little, if any, role to play in the
determination of particular planning
applications. If one contrasts the wording
of paragraph 109 (http://bit.ly/2ypXngB)
with the examples of restrictive policies
given in footnote 9, one sees that the
former lacks the clearly restrictive
wording of those examples. b

Trevor Ivory is Head of Planning and
George Avery is a trainee at DLA Piper
trevor.ivory@dlapiper.com
george.avery@dlapiper.com

Related competencies include
Planning

F E B R U A R Y/ M A R C H 2 0 1 8 2 1

RICS L A N D
JO U RN A L

C OASTA L H E R I TAGE

Toby Driver and Dan Hunt explore
how LiDAR maps are helping a study
of the islands, reefs and headlands
of Ireland and Wales to understand
climate change impacts on coastal
and maritime heritage

The white
ribbon zone

O

n 1 January 2017, work began on Climate,
Heritage and Environments of Reefs,
Islands and Headlands (CHERISH), a
five-year project that will receive more
than €4m funding through the EU’s Ireland
Wales Co-Operation Programme 2014–20,
priority 2 – adaption of the Irish Sea and
coastal communities to climate change.
CHERISH is led by the Royal Commission on the Ancient and
Historical Monuments of Wales in partnership with the Discovery
Programme: Centre for Archaeology and Innovation Ireland,
Aberystwyth University’s Department of Geography and Earth
Sciences, and the Geological Survey of Ireland.
The key objective of the project is to increase knowledge and
understanding of the impacts – past, present and near-future –
of climate change, increased storminess and extreme weather
on the cultural heritage of reefs, islands and headlands of the
Welsh and Irish seas. The project seeks to address gaps in both
data and knowledge for these remote coastal landscapes and
develop a greater understanding of climate change impacts
on fragile coastal heritage sites. The commissioning of new,
high-resolution, light detection and ranging (LiDAR) surveys
at the start of the project was designed to establish accurate
3D baseline data for the Welsh islands, against which coastal
change could be measured in the future.
CHERISH brings together a cross-disciplinary team of
experts who are working as an integrated, international survey
team. This team, in collaboration with government, academic
and business partners, will link previously disparate data sets
for land and sea tackling the “white ribbon zone”, a traditional
term used by hydrographers to refer to the nearshore area, and
reconstruct past environments and weather history. Christopher
Catling, Secretary of the Royal Commission, describes CHERISH
as “an exciting new project, bringing a strong partnership of
archaeologists, geoscientists and maritime specialists to bear on
the significant challenges posted by climate change”.

Making good the data gaps
At the start of the CHERISH project, data coverage for the more
remote stretches of the Welsh coastline and islands was poor
or non-existent, especially LiDAR. Significant stretches of coast
lacked any accurate 3D data, while others only had older
two-metre resolution LiDAR data sets available. LiDAR at a
2 2 F E B R U A R Y/ M A R C H 2 0 1 8

CHERISH archaeologists Dr Toby Driver
and Dan Hunt investigate low-lying
earthworks on Ramsey Island with the
benefit of the new LiDAR data to hand

resolution of 0.5 metres – the minimum required for archaeological
interpretation and landscape mapping – was mainly absent, and
there was none at all for principal Welsh islands including Skerries,
Bardsey, the St Tudwal’s Islands, Ramsey and Grassholm.
Around two-thirds of Puffin Island in north Wales was covered
with existing one-metre LiDAR data, which was insufficient to
show the archaeological earthworks of a medieval monastery
below the scrub vegetation. Further south, 0.5-metre LiDAR
data covering the Welsh islands of Skomer and Skokholm had
been purchased by the Royal Commission in 2011 to enable the
renowned prehistoric field systems here to be mapped in detail
as part of a long-running landscape research project with the
universities of Cardiff and Sheffield.
So, in early February 2017, the Royal Commission asked
Leicestershire-based Bluesky, a company specialising in the
acquisition of aerial survey data, to collect 0.25m LiDAR data
from six Welsh islands at low tide in winter conditions with low
vegetation and bare trees. Bluesky flew from its East Midlands
base and collected the data using its Teledyne Optech Galaxy
LiDAR system on 24 February 2017. Wardens on both Bardsey
and Ramsey islands watched the survey aircraft above, and even
tweeted a photo of the flight.
Building on the Bluesky data, a series of baseline coastal
monitoring flights was carried out by CHERISH staff in a light
aircraft, establishing a library of high resolution, low-level aerial
photographs for coastal Wales and southern Ireland. These
show the current level of erosion at key archaeological sites, with
the process repeated at intervals, particularly following major
weather events such as Storm Ophelia in October 2017.
Aerial photographs taken include stereo pairs and overlapping
images in orbit around a site; these can be used to create
highly detailed digital 3D terrain models, which are particularly
helpful for offshore properties and nature reserves where drone
access may still be difficult. These remote-sensing approaches
inform surveys on the ground, including archaeological mapping,
terrestrial laser scanning and palaeoenvironmental sampling to
develop models of climate history and past storminess.

LiDAR at work
In order to capture highly accurate LiDAR data, a survey
aircraft equipped with a system of lasers is used. These
lasers are trained on the ground, and the time taken for
their beams to bounce back to the aircraft-mounted
receivers is recorded. The distance between the aircraft
and the ground is then calculated using the aircraft’s
position, derived from on-board satellite positioning
equipment, as well as the time taken for the beam to
return and the known value of the speed of light.
Readings can also be taken to determine the height
of buildings, vegetation and other surface structures,
such as above-ground pipelines, highways, street
furniture, power lines and railway tracks.

l Bardsey
Island/Ynys Enlli
National Nature
Reserve, Gwynedd:
new Bluesky LiDAR
data showing
coastal erosion,
and failing hard
defences, on the
south of the island

Academy of Sciences and Arts, funded through the Slovenian
Research Agency and the ArchaeoLandscapes Europe project.
For each of the six Welsh islands, 12 visualisations were
produced, including single-directional hill shades created
with light projecting from four angles and a sun elevation of
30 degrees, and hill shades in 16 directions – both colour and
black and white – from the same elevation. The LiDAR-based
visualisations also included slope, simple local relief models, sky
view factor, sky illumination and local dominance. Each retained
its original positional data, which means it can be imported
into desktop mapping and geographical information systems
software such as ArcGIS as georeferenced raster images.

Revealing the landscape
During summer, 2017 work began in earnest to field-check the
results of these new LiDAR data sets and discuss the results
with island managers. This was the first time the wardens of
Bardsey National Nature Reserve and RSPB Ramsey Island had
seen their islands modelled in 3D.
The LiDAR data has an immediate value for the management
of the natural environment, showing everything from the precise
extents of bracken and scrub to scatters of bird burrows on the
Skerries Islet and the positions of individual gannet nests on
RSPB Grassholm Island. For the archaeologists investigating
the landscape on the ground, meanwhile, there is no substitute
for having such high-resolution LiDAR to hand. Extremely subtle
or low-lying archaeological earthworks may be invisible under
bracken or in dull, overcast conditions; however, the LiDAR
shows all of these with perfect clarity.
The precision of the cliff-edge mapping in the new data is
also important for monitoring long-term coastal change on
these vulnerable islands, while more immediately the LiDAR
plots will form the basis of attractive new interpretation panels
in the island visitor centres. Dr Toby Driver, Senior Investigator
at the Royal Commission, comments: “The Bluesky LiDAR offers
unparalleled views of these key Welsh Islands. Processing has
allowed deeper interrogation of the data and revealed new
monuments. This will be combined with drone photogrammetry
and detailed ground surveys to provide an absolute fix on
eroding coastlines for future climate change monitoring.” b

Toby Driver is a senior investigator (aerial survey) for the Royal Commission
on the Ancient and Historical Monuments of Wales, and one of the lead
investigators for the CHERISH project
toby.driver@rcahmw.gov.uk
Dan Hunt is the Royal Commission on the Ancient and Historical Monuments
of Wales’s Archaeological Investigator for the CHERISH project
daniel.hunt@rcahmw.gov.uk

www.cherishproject.eu
www.irelandwales.eu
@irelandwales

Related competencies include
Management of the natural environment and landscape, Mapping,
Remote sensing and photogrammetry, Surveying land and sea

F E B R U A R Y/ M A R C H 2 0 1 8 2 3

RICS L A N D
JO U RN A L

LAND SALES

Tax planning

A

Sophie Dixon provides a useful summary of the key tax points that both
landowners and their advisors should consider when selling UK land

number of
taxes are likely
to apply when
selling UK land,
whether payment
is received on
completion or
over several
years. Planning ahead is therefore vital to
avoid complex and expensive tax issues.

Capital gains tax
Allowable deductions can be made from
the proceeds of sale for the purposes of
capital gains tax (CGT). These include
the acquisition cost, or probate value if
the land was inherited, incidental selling
costs, and the cost of any additions or
improvements that are present at the date
of disposal. Individuals will be required
to pay CGT on the value of gains that

2 4 F E B R U A R Y/ M A R C H 2 0 1 8

exceed their annual exemption, which is
presently £11,300. Gains above the limit
will be subject to CGT at a maximum
rate of 20% for non-residential property.
The Finance Act 2016 introduced an
upper rate, with a current maximum of
28%, which applies to gains realised
on residential properties. The relevant
legislation defines residential property
gains as those realised on disposal of
a dwelling, or of certain rights under
contracts for off-plan purchases. A
“dwelling” is defined for these purposes
as land that during the period of
ownership consisted of or included
a building that is used or suitable for
use as a dwelling, or is in the process
of being constructed or adapted for
such use, as well as any garden and
grounds that are or are intended to
be enjoyed with it. As such, land with

planning permission to convert a property
for residential use may be covered, and
certainly will be when any building or
conversion work begins.

Income tax
Profits realised from a trade that deals in
or develops land are chargeable to income
tax at rates of up to 45%; a CGT rate of up
to 28% therefore seems more appealing.
In some cases, these favourable rates
have led property developers and dealers
to design structures that were intended to
disguise their trade, thus ensuring that the
profits of sale were deemed to be capital
gains rather than income.
In response, the existing anti-avoidance
rules were widened in the 2016 budget, so,
now, any profits that essentially arise from
trading in land will be charged to income
tax, or corporation tax for companies.

However, ascertaining whether an
individual is trading may not be simple.
Consideration should be given to the
intention of sale and to the conclusions
of tests commonly referred to as “badges
of trade”. When considering the sale of
land, appropriate badges may include the
following, all of which would point towards
a trading motive.
bb Profit motive: was one of the main
purposes of acquiring the land to realise a
profit from its disposal?
bb Frequency and number of similar
transactions: has the seller made a
number of similar sales previously?
bb Connection with an existing trade:
is the seller associated with a property
development business?
bb Finance arrangements: was the land
purchased using short-term finance?
bb Length of ownership: was the land
only held for a short time before resale?
Agreements between landowners and
promoters or developers that create
the right to share in the proceeds of any
subsequent development potentially fall
under this anti-avoidance legislation.
Often known as “slice of the action”
contracts, many feature an initial capital
sale and later payments subject to certain
criteria, for example the building of a
certain number of houses. As such, later
payments received by the landowner may
be deemed to be trading income, as the
seller is said to have an interest in the
trade of the purchaser.

Information for your advisor
Detailed information, as below, needs to
be provided to your tax advisor, so they
can offer the most effective support for
any reliefs or claims should HMRC raise an
enquiry into the sale later.
Acquisition details
Where your land has been purchased,
your advisor may request a copy of the
completion statement or transfer deed to
establish the allowable cost. The probate
value will be used to calculate any gain
for inherited land. It may also be useful to
provide copies of the will or other deeds.

Should you have received the land by
way of a gift, details of any reliefs claimed
at the date of the gift – for example,
holdover relief for agricultural land – will
ensure that the appropriate cost is
deducted. If the land was acquired before
31 March 1982, the cost is deemed to
be the market value on that date and an
appropriate valuation will be required.
Additions and improvements
Capital improvements to a property are
an allowable deduction to the extent
that they have been incurred wholly and
exclusively on the land to enhance its
value, and are reflected in the state and
nature of the land at the date of sale.
Examples may include drainage and
planning fees. Where incurred, these
should be clearly documented and the
details provided to your advisor.
Professional fees
HMRC will allow deductions for
professional fees that are wholly and
exclusively incurred as part of the
disposal of the land. Common examples
include agents’ fees, legal fees and
promotion fees. Where possible, fee
notes that detail the work completed and
name of the land can help to support
a deduction. Where generic fee notes
are provided, it may not be possible to
deduct the whole fee and instead only a
proportion may be allowed.
Evidence of intentions
Determining whether a profit on disposal
of land is trading income or a capital
gain on an investment can be a complex
judgement based on a variety of facts
and inferences. To the extent that
evidence of the landowner’s intentions

“
Determining whether
a profit is trading
income or capital
gain is complex

as badges of trade at key times can be
provided, this will help establishing the
correct tax treatment of the sale.

Managing VAT liabilities
Should the landowner be VATregistered, the supply of land and
buildings as a freehold sale is generally
exempt from VAT; therefore no output
VAT would be charged on the sale cost.
Landowners may have the opportunity
to opt to tax their land, and in doing so
they will make the sale a standard-rated
supply attracting output VAT, currently
at 20%. One of the benefits of opting
to tax is that, normally, landowners
will be able to recover VAT incurred
on promotion fees, professional fees
or selling costs that would otherwise
have been non-recoverable. Should a
landowner look to register an option,
they must meet HMRC’s conditions or
apply for permission from HMRC.
An option to tax may follow the
land for up to 20 years. One effect
of this would be that, should the land
be commercially let – either by the
purchaser or current landowner –
output VAT may be chargeable on
commercial rents.
There are some circumstances
in which an option can be revoked;
however, these can be difficult to realise.
An option may affect the sale value or
rental value of the land because exempt
bodies, for example a pension fund, will
be unable to reclaim any VAT incurred.
Stamp duty land tax (SDLT) is
calculated on the VAT-inclusive sale
value. An option to tax will therefore
affect the SDLT charge and, depending
on the terms of the sale agreement, may
have an impact on the sale proceeds.
We would strongly recommend
seeking professional advice as soon
as possible to avoid the pressure of a
looming completion deadline.

Points to consider
From our experience of dealing with
landowners, we have identified some
common pitfalls and other points to
consider during the sale.

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LAND SALES

Entrepreneurs’ relief
Where available, entrepreneurs’ relief (ER)
provides for a lower rate of CGT, currently
10%. This can represent a considerable
tax saving; for example an individual with
a chargeable gain of £10m who makes
a successful ER claim will save £1m of
CGT. To qualify for relief, a number of
conditions must be met, and these should
be reviewed thoroughly.
Frequently overlooked is that relief will
only be available to assets of a qualifying
trading business. This would include,
for example, the letting of furnished
holiday accommodation meeting certain
conditions, but not the passive
long-term letting of residential or
commercial property – that is, a letting
where there are no other, additional
services provided.
Where the qualifying business
has ceased, there is a limited period
to dispose of the assets before any
entitlement to ER is lost. A further
condition is that ER is available for gains
that arise from the sale of land when this
is part of a disposal or cessation of the
whole or part of a business. Where there
is no sale or cessation, ER is not going to
be available.

Consideration by instalments
The manner in which individuals receive
payment can affect both the tax treatment
and timing of tax payments. Where the
value of later instalments is ascertainable
at the date of the sale contract, these
will be taxable at the date of completion,
potentially creating a cash-flow issue
because CGT payments fall before the
receipt of sale proceeds.
Overage payments
Should landowners be entitled to
an overage payment, these may be
chargeable to income. It is therefore
essential to clarify dates and values of any
instalment payments, and the conditions
that give rise to any subsequent payments.
Investment of proceeds
Occasionally, professional efforts have
focused on completing the sale, taking
little time to consider how proceeds might
be invested to use available tax reliefs.
Where landowners intend to re-invest,
certain qualifying assets or investments
may provide relief for CGT or income tax.
Inheritance tax
Where assets on an estate have been

converted from land to cash, any business
property relief and agricultural property
relief, for example in the case of farmland
sold, will no longer be available. The value
of land in an estate may have qualified for
an exemption of up to 100% as qualifying
property; however, following the sale,
the value is now held as cash and is fully
taxable. To preserve relief, the landowner
could re-invest the proceeds in a qualifying
asset in the appropriate timescale, but
should also consider their inheritance
tax planning. b

RICS celebrates 150 years
RICS marks its 150th
anniversary in 2018,
and to commemorate
this milestone, the
organisation is running
some exciting campaigns
for professionals, members
and the wider industry.
Pride in the Profession will celebrate
150 years of surveying successes
by looking at the positive impact
the profession has had in society,
demonstrating how varied and
rewarding a career in surveying can be.
We need you to help us showcase great
examples by nominating inspiring people
and projects to illustrate the benefits
that surveying brings to the world
around us.
Submissions can be made via the
RICS website (rics.org/150) where
the best examples will be published
throughout the course of the campaign.
Cities for our Future, meanwhile, is
a global competition run by RICS in
partnership with UNESCO designed

2 6 F E B R U A R Y/ M A R C H 2 0 1 8

to address the most pressing
issues facing the world’s rapidly
expanding cities.
Global urban populations are
predicted to grow by more than
2.5bn by 2050. This presents
one of the defining challenges
of our time, putting unprecedented
levels of strain on property, construction,
infrastructure and land use.
RICS will challenge students in
the fields of surveying, architecture,
design and engineering among others
to consider the problems posed by
rapid urbanisation and find innovative
solutions to the issues facing many
global cities. The competition, launched
on 15 January, will be judged by some of
the leading names from our professions
and beyond, and the best idea will be
awarded a cash prize.
We’re also inviting our members
around the world to mentor shortlisted
entrants – a great opportunity to help
shape future talent. To register your
interest, email us at 150@rics.org.

Finally, the Pledge150 campaign will
also see the organisation partnering
with property profession charity LandAid
to raise £2.25m by December 2018,
to provide 150 bed spaces for young
people at risk of homelessness.
n www.rics.org/150
n www.rics.org/pledge150

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